NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Are Chinese Growth and Inflation Too Smooth? Evidence from Engel Curves

Emi Nakamura, Jón Steinsson, Miao Liu

NBER Working Paper No. 19893
Issued in February 2014
NBER Program(s):   DEV   EFG   IFM   ME

China has experienced remarkably stable growth and inflation in recent years according to official statistics. We construct alternative estimates using detailed information on Chinese household purchasing patterns. As households become richer, a smaller fraction of total expenditures are spent on necessities such as grain and a larger fraction on luxuries such as eating out. We use systematic discrepancies between cross-sectional and time-series Engel curves to construct alternative estimates of Chinese growth and inflation. Our estimates suggest that official statistics present a smoothed version of reality. Official inflation rose in the 2000's, but our estimates indicate that true inflation was still higher and consumption growth was overstated over this period. In contrast, inflation was overstated and growth understated during the low-inflation 1990's. Similar patterns emerge from the data whether we base our estimates on major categories such as food or clothing as a fraction of total expenditures or subcategories such as grain as a fraction of food expenditures or garments as a fraction of clothing expenditures.

download in pdf format
   (525 K)

email paper

This paper was revised on September 29, 2015

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w19893

Published: Emi Nakamura & Jón Steinsson & Miao Liu, 2016. "Are Chinese Growth and Inflation Too Smooth? Evidence from Engel Curves," American Economic Journal: Macroeconomics, vol 8(3), pages 113-144. citation courtesy of

Users who downloaded this paper also downloaded* these:
Chari and Henry w19840 Two Tales of Adjustment: East Asian Lessons for European Growth
Fan, Kanbur, Wei, and Zhang w19648 The Economics of China: Successes and Challenges
Auerbach and Gorodnichenko w19911 Fiscal Multipliers in Japan
Bloom, Romer, Terry, and Van Reenen w19951 Trapped Factors and China's Impact on Global Growth
Wang and Whalley w19898 Are Chinese Markets for Manufactured Products More Competitive than in the US?: A Comparison of China -US Industrial Concentration Ratios
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us